Tax plan or tax blunder? A breakdown of the latest property tax proposal
Little relief to homeowners thanks to potential local income tax increases.
Dear neighbor,
This week, the House Majority unveiled their 368-page proposal for property tax relief, and I want to share my concerns about this proposal with you.
The proposal includes tax breaks for big businesses, increases in local income taxes, little relief for homeowners and diverting money from traditional public schools to charter schools.
Because transparency is a critical part of this process, the below newsletter breaks down where this proposal (Senate Bill 1) stands as of 12:30 p.m. today, April 9.
Here’s a breakdown of how this proposal may impact your wallet:
No Significant Savings for Homeowners
Homeowners will get an average property tax credit of $192 each year, but this isn’t the same for everyone. Some homeowners will receive less.
Seniors of a fixed income and disabled veterans get an additional $150. Partially disabled veterans get an additional $250.
Eliminates the Homestead Standard Deduction by 2030. This deduction lowers your property’s assessed value by 60% or $45,000, whichever is less.
Eliminates the credit for first-time homebuyers, which was included in the Senate property tax plan.
Changes the eligibility thresholds for the Over 65 Circuit Breaker Credit and Deduction. More seniors qualify but the amount they save stays the same.
No relief for renters.
Increasing Your Local Income Taxes
Zeroes out the savings homeowners receive on their property taxes with increases in local income taxes.
Cities and towns could impose local income taxes at a maximum rate of 1.2%. Currently, only counties impose an income tax.
Raises the maximum amount of local income taxes a county can impose from 2.5% to 2.9%.
Cuts to Local Services
Local governments would lose $938.6 million over the next three years.
This means local police, firefighters, public libraries and other services are at risk. Fire chiefs have shared they’ll have to close fire houses or let firefighters go if this proposal passes.
In our community, Hamilton County would lose $100.6 million by 2028 and Marion County would lose $53 million by 2028.
Public schools would lose $534.8 million in the next three years: $130.4 million in 2026, $146.8 million in 2027 and $266.9 million in 2028. This means our schools will struggle to pay teachers, class sizes will get bigger and students won’t get the quality education they deserve.
Tax Breaks for Big Businesses
Eliminates taxes on business equipment (business personal property). Big businesses get a tax break of $1.2 billion, since millions of dollars in equipment will eventually be tax-free.
Homeowners continue footing the bill for big companies. As of 2024, homeowners were paying 58.4% of Indiana’s property tax revenue, while commercial and industrial companies paid 39.3%.
Hoosiers will be asked to shoulder more of the tax burden for their communities. Businesses don’t pay local income taxes. With the elimination of business personal property taxes and the growth of local income taxes, you’ll be paying a bigger share of the pie while getting fewer services.
Diverting Dollars from Traditional Public Schools to Charters
The bill includes portions of Senate Bill 518, which diverts property tax revenue from your local traditional public schools to charter schools.
Corporations and charter school CEOs are the winners of this proposal since they get massive new benefits while homeowners get little. Homeowners will save some money, but other tax increases balance out potential savings. Our communities will receive massive cuts, impacting the services they provide.
If you have any questions, thoughts or concerns, please reach out to my office at h32@iga.in.gov.
In service,
I would prefer a push to eliminate residential property tax altogether. A tax on ownership means there is no such thing as ownership. It is just punishment for ownership, and the rate is not based on ability to pay the tax. That is why most taxes are based on the transfer of wealth. When wealth is transferred you can guarantee the payer is able to pay that tax. I would rather see an increase in income and/or preferably sales taxes.
As far as taxes on corporations, they can have a 0% tax rate for all I care. A tax on a corporation is just an indirect tax on individuals. It just gets taken out either by a reduced salary or through increased prices. I would rather be taxed directly so I have a full understanding how much of my money is going to the government instead of having it obfuscated through a corporation.
I appreciate your concerns and your work against such an egregious budget proposal. There is no need to give corporations additional tax breaks over those that they already enjoy. And there is no need to take funds from public education to fund what are essentially private or religious educational endeavors. Thank you for your vigilance!